If your business suffers a claim for Accidental Damage or Perils, then you may not be able to trade while it’s being fixed. This might put a bit of pressure on your cash flow as although certain expenses may cease if you’re not trading, a lot of costs will continue, and you’ll still want to put food on your own table.
You can insure for this lost profit – and how you insure for it will depend on how you operate. If you’re a property owner, you’ll be insuring for the value of the rents you aren’t receiving if your building burns down. If you’re a factory workshop, you might insure for your fixed expenses and payroll so you can keep staff paid and everything ready to run if you had a small fire that closed you down for 3 months.
How long you need the cover for will depend on your situation – it might only take 6 months to redo your fitout, but your business could have lower profits for a further 12 months after this while you re-establish your customer base.
The key thing to remember about this cover is that it generally requires a claim under your Property Damage section. For example, if you’re not insured for Flood for Property Damage, then you won’t get Lost Profits if a Flood stops you from trading. It’s also important to remember this is cover if your business suffers damage – if you’re worried about lost income if YOU become sick or injured, then you need to look at Accident & Sickness Insurance.